KCB Boss Earned Shs10.2 Billion In 2018

KCB Group chief executive officer Joshua Oigara earned KSh273 million (UShs10.2 billion) in salary, bonus and allowances in 2018, a year when Kenya’s biggest bank by assets announced a record net profit, Business Daily reports.

Mr
Oigara’s 6.6 percent (UShs634.5bn) pay
increase mainly came in the form of a higher bonus of KShs180 million (UShs6.7bn) that went up from KShs147 million
(UShs5.5bn) in 2017, and which more
than compensated for a KSh20 million (UShs746.3m)
drop in allowances to KShs10 million (UShs373.2m).

His
higher bonus (and total pay package) was in tandem with KCB’s 21.8 percent
growth in profit last year to KSh24 billion (UShs895.8bn), the highest-ever earnings
reported by a Kenyan bank.

KCB
ties bonus payments to achievement of multiple metrics, including the
profitability of the group.

The
bank’s employees are paid a bonus if they achieve 95 per cent or more on a
scorecard of the set targets.

Bonus
policy

The
bank Tuesday said the main driver for the increase in the executive directors’
pay was bonus payment, which is performance-based, and an enhancement in the
bank’s bonus policy for employees.

KCB, in its 2018 annual report, had said that “executive directors are entitled to a performance based bonus pay… (while) allowances paid include a house allowance, a car allowance, a telephone allowance and allowances related to loan benefit adjustment.”

Mr
Oigara’s basic salary rose by Sh3 million to Sh68 million while gratuity
increased by Sh1 million to Sh14 million. His non-cash benefits that include
medical insurance cover, club membership and professional indemnity cover
remained flat at Sh1 million.

“The
remuneration of executive directors is per the negotiated employment contracts
and is the sum total of many factors, starting from the market average obtained
through a regional survey of executive compensation all the way to bonuses that
are linked to a range of metrics such as return on equity,” the bank said
Tuesday.

Drive
productivity

The
performance-based pay structure adopted by the lender reflects a trend among
companies that incentivise their executives based on the company’s performance
to drive productivity.

Mr
Kimathi’s pay rose by 39 percent from KSh59 million (UShs2.2bn) to KSh82 million (UShs3bn) last
year.

Like
Mr Oigara’s, it was boosted mainly by an increase in bonus from KSh23 million (UShs858.5bn) to KSh43 million (UShs1.6bn). His basic pay also went up by KSh3
million (UShs111.9bn) to KSh32
million (UShs1.19bn).

“Bonus
and salary adjustments for staff are tied to achievement of multiple metrics,
including profitability of the group and at all times reflect the bank’s
performance in a year.

In
the year under review, KCB Group PLC full year net profit rose 22 per cent to a
record Sh24.0 billion from KSh19.7 billion (UShs735.19bn) reported in 2017,” the group
said.

In
the same year, the lender also paid its non-executive directors more. Across
the group, non-executive directors were paid a total of Sh427 million (UShs15.9bn) compared with KSh400 million (UShs14.9bn) in 2017, a 6.8 percent increase.

Non-executive
directors include those sitting on the boards of subsidiaries across the
region.

The
payout also includes allowances for those serving in Kenyan units such as KCB
Capital Limited, KCB Insurance Agency Limited and the KCB Foundation.

The
higher perks for Mr Oigara and Mr Kimathi are also a reward for overseeing
higher returns for shareholders of the bank, who enjoyed a 16.7 percent
increase in dividend earnings last year.

Dividend
per share

The
lender paid its owners KSh3.50 in total dividend per share last year, up from
Sh3 for the year ending December 2017.

The
bank is trading at about KSh40.50 a share, putting the dividend yield at
current price at 8.6 per cent. This is less than a percentage point lower than
the 9.3 percent offered on the government’s risk-free one-year Treasury bill.

In
2017, the highest paid bank executive was Cooperative Bank’s Gideon Muriuki,
who took home KSh370 million comprising of KSh99.8 million in salary and
allowances and a KSh270.7 million bonus. The lender is yet to disclose Mr
Muriuki’s pay package for last year.

Equity
Bank disclosed last month that chief executive James Mwangi’s salary in 2018
remained unchanged at KSh60.4 million even as the lender’s net profit rose by
five percent to KSh19.8 billion. The bank said he was not paid a bonus during
the year.

He
is however set to earn Sh416 million in dividends from the 208 million shares
he controls in the lender.

Safaricom,
Kenya’s most profitable firm and the largest listed company at the NSE by
market capitalisation, paid its chief executive, Bob Collymore, KSh196 million
for the year ended March 2017. The firm is expected to reveal his 2018 salary
later this year.

Listed
companies have since July 2017 been required to disclose directors pay in their
annual reports, after the government moved to enforce the measure to deepen
transparency and strengthen corporate governance.